Background and Context
Facing an unprecedented health crisis marked by a severe shortage of medications, which reached up to 30% in 2023 and directly affected millions of people, particularly those with serious illnesses like cancer, the Mexican government has decided to embark on a transformative structural path. In 2022, over 15.2 million prescriptions were unmet in major public health institutions, impacting individuals with neurological, psychiatric, Parkinson’s, and hypertension conditions. This situation has led to complaints filed with the National Human Rights Commission and forced many patients to resort to legal action to claim their right to health.
The New Decree and Plan Mexico
In this urgent context, a new decree issued by President Claudia Sheinbaum Pardo proposes a paradigm shift: transforming Mexico into a global leader in pharmaceutical production and innovation, with a sovereignty model, strategic investment, and industrial development.
This decree is a central part of the so-called Plan Mexico, a long-term strategy to revive national production of medicines and healthcare supplies. Transforming the country into a pharmaceutical excellence hub involves attracting foreign investments and consolidating productive infrastructure, creating high-value jobs, and strengthening regulatory and institutional capabilities.
Leveraging Public Procurement
The cornerstone of the new model is leveraging Mexico’s public procurement capacity—over 300 million pesos every two years—to reindustrialize the sector. The federal government plans to offer competitive advantages to companies establishing plants, laboratories, research centers, and logistics chains within the national territory, with a particular focus on Development Economic Poles for Well-being (Podecobi) and incentives, such as additional points in public tenders for those with local operations under the new consolidated purchases system for 2027 and 2028.
Revitalizing Birmex
This scheme also aims to revitalize Birmex (Laboratorios de Biológicos y Reactivos de México), the state-owned enterprise that will act as a coordinating body for new investments, linking efforts between the public, private, and academic sectors. As part of the plan, bioincubation pharmaceutical plants will be created to foster biomedical research, technological innovation, talent development, and national intellectual property development.
Regulatory Modernization
In parallel, the Federal Commission for Protection against Health Risks (Cofepris) is undergoing rapid modernization to align with international regulatory standards. Currently, 60% of the procedures have been digitized, aiming for full digitalization. The DIGIPRiS platform for clinical trial authorization has been modernized, and a strategic collaboration with the Mexican Institute of Industrial Property (IMPI) has been established to expedite patent registration and health processes. These advancements aim to reduce waiting times, increase transparency, and facilitate new investments entering the country.
Challenges and Concerns
Despite the plan’s magnitude, it is not without tensions. Representatives from both national and international pharmaceutical sectors have raised legitimate concerns about the reinstatement of performance requirements, such as establishing a factory in Mexico to participate in tenders. This clause, which existed until 2008 and was removed to foster global competition and reduce prices, has been flagged as a potential source of conflict with the Mexico-United States-Canada Agreement (T-MEC).
The T-MEC explicitly prohibits member countries from imposing conditions on foreign investments, such as requiring the export of products, local hiring, or factory installation, for preferential treatment. Although there are exceptions—such as public health, security, or environmental reasons—any attempt to apply these requirements could be interpreted as a violation of the treaty, especially if it discriminates between national and foreign companies or offers conditional economic benefits.
If confirmed, Mexico could face reprisals in investor-state dispute settlement mechanisms, including trade sanctions, multimillion-dollar lawsuits, or even tariff imposition by its North American partners. In the worst-case scenario, these disputes could erode investor confidence in Mexico’s investment climate and jeopardize the country’s preferred access to its most crucial market: the United States.
Canifarma (National Chamber of Pharmaceutical Industry) has warned that while the government’s policy may protect Mexican industry from unfair competition from countries like India or China, which offer low-cost medications without local investment, designing the regulatory framework clearly is crucial to avoid international sanctions. Particularly for patented medications, whose development and innovation are globally concentrated in a limited number of facilities, enforcing local production could be unfeasible and counterproductive.
Key Questions and Answers
- What is the main issue Mexico faces? Mexico is grappling with a severe shortage of medications, affecting millions, especially those with serious illnesses.
- What is the government’s new strategy? The Mexican government aims to transform the country into a global leader in pharmaceutical production and innovation, focusing on sovereignty, strategic investment, and industrial development.
- How does the new model leverage public procurement? The government plans to use its public procurement capacity to reindustrialize the sector, offering competitive advantages to companies establishing local operations.
- What are the concerns regarding regulatory modernization? There are concerns that reinstatement of performance requirements could conflict with the T-MEC, potentially leading to investor reprisals.
